Profit-motive test for scrap sales: discarded goods are not business sales absent proof of continuing trading activity.

Sales of discarded machinery, chemicals, scrap, empty drums and other unserviceable stores were not taxable as business sales where the Revenue failed to show that the assessee was carrying on a business in those goods. The controlling test for the assessment years in question was whether the transactions amounted to a continuing course of dealings with profit-motive, evidenced by volume, frequency, continuity and regularity; later statutory definitions of "business" did not apply. Mere recovery of value from discarded or surplus items, even if it reduced production costs or yielded substantial receipts, was insufficient without proof of an intention to trade in those materials. On the record, no such profit-motive was established, and the reference was answered in favour of the assessee.

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Issues: Whether sales of discarded machinery, chemicals, scrap, empty drums, and other unserviceable stores were taxable as business sales in the absence of evidence of profit-motive.

Analysis: The liability to tax turned on whether the assessee was carrying on a business of selling the disputed materials. For the relevant period, the statutory definitions of "business" inserted later in the sales tax enactments did not govern the assessment years in question. The controlling test was whether the transactions showed a course of dealings with profit-motive and the usual indicia of business, namely volume, frequency, continuity, and regularity. Mere realization of value from discarded or surplus goods, even if it reduced production costs or brought in substantial receipts, was not enough unless the evidence showed an intention to carry on a business in those goods. On the record, there was no material to establish such profit-motive in respect of the disputed sales.

Conclusion: The sales were not taxable as business sales, and the answer to the referred question was in favour of the assessee and against the Revenue.

Ratio Decidendi: A sale of discarded or unserviceable goods does not amount to business in those goods unless the transactions are shown to be carried on with profit-motive and with the indicia of a continuing business activity.

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